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Protecting rights and facilitating stable relationships among federal agencies, labor organizations, and employees while advancing an effective and efficient government through the administration of the Federal Service Labor-Management Relations Statute.

This case is before the Authority on a negotiability appeal filed under
section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute
(the Statute). It concerns the negotiability of two provisions of an agreement
that were disapproved by the Agency head pursuant to section 7114(c) of the
Statute. One provision concerns the termination of probationary employees and
the other concerns the per diem rate to be paid employees who do not incur
lodging costs but who stay with relatives or friends. For the reasons that
follow, we conclude that the first provision is inconsistent with Federal law
and Government-wide regulation and is not within the duty to bargain. We
conclude that the second provision is within the duty to bargain.

II. Procedural Issue

The parties were directed to adopt one of the provisions that is at
issue in this case as the result of interest arbitration that was directed by
the Federal Service Impasses Panel (the Panel). The arbitrator in that
proceeding issued a decision on June 29, 1989, which included, among other
things, the second provision herein.(1)

The arbitrator's decision was limited to portions of six articles that
had been specifically presented to him. Parties' joint statement of position at
2. Subsequent to the issuance of the arbitrator's decision, the parties had
"several discussions and met extensively on at least one occasion to continue
substantive negotiations over several articles which remained unresolved after
the arbitrator's award." Id. During those discussions, "provisions . . .
were in fact modified and agreed to by the parties subsequent to the
arbitrator's award." Id. By memorandum dated September 25, 1989, the
Agency head disapproved two provisions, one of which was the subject of the
arbitrator's award and another that had not been before the arbitrator.

The facts of this case are distinguishable from those in
International Organization of Masters, Mates and Pilots and Panama Canal
Commission, 36 FLRA 555 (1990) (Panama Canal Commission) In
Panama Canal Commission, we dismissed the union's petition for review of
negotiability issues because the parties' collective bargaining agreement had
become final and binding when it was not disapproved by the agency head within
30 days of the date of an interest arbitrator's decision. In Panama Canal
Commission, however, the interest arbitrator's decision encompassed the
parties' entire agreement. Such is not the case here. Rather, the facts show
that the parties engaged in further, substantive negotiations following the
issuance of the interest arbitrator's decision and that issuance of that
decision did not constitute the date on which the agreement was executed. Thus,
in this case, unlike Panama Canal Commission, the 30-day time limit for
Agency-head review, which is set forth in section 7114(c) of the Statute, was
not triggered by the issuance of the interest arbitrator's decision.

III. Provision 1

ARTICLE 43 (Probationary Employees), Section 4:

A. Prior to making a recommendation to remove a probationary
employee, the EMPLOYER will inform the employee in writing of the reasons,
based upon inadequacies of the employee's post employment performance and
conduct.

B. Upon request, the probationary employee will be provided a meeting
with the EMPLOYER to present any evidence, explanation or defense to the
potential removal. The probationary employee will be provided, upon request,
with copies or access to any documents or files which evidence the employee's
deficient conduct or performance in advance of the meeting. This includes
information relied upon by the EMPLOYER which has not previously been provided.
The employee may be represented by the Union.

C. If the EMPLOYER determines, after this presentation, to go forward
with the recommendation to remove, all materials provided by the employee will
be sent with the recommendation. The EMPLOYER will provide the employee with
written notice of the final decision.

A. Positions of the Parties

The Agency asserts that this provision is inconsistent with law and
Government-wide regulation because it creates procedural protections for
probationary employees beyond those promulgated by the Office of Personnel
Management (OPM) and would subject the termination of probationary employees to
arbitral review. In support of this contention the Agency asserts that both the
Authority and the courts have held that procedural protections for probationary
employees may not be established through collective bargaining and may be
provided by OPM alone. The Agency contends, additionally, that this provision
excessively interferes with management's right under section 7106(a)(2)(A) to
hire because it establishes procedural prerequisites to, and allows for
arbitral review of, the termination of probationary employees.

The Union asserts that Provision 1 does not prevent the Agency from
summarily terminating probationary employees and is fully consistent with law
and Government-wide regulation. In this regard the Union asserts that under
relevant court decisions,(2) only proposals that subject an agency's termination of a
probationary employee to "after the fact third party review" restrict an
agency's right to "summarily terminate a probationary employee." Union reply
brief at 5. Additionally, the Union asserts that Provision 1 does not interfere
with management's right to make its own assessment of an employee's
qualifications, but "merely provides a procedure for allowing the employee to
provide input when the supervisor is contemplating a recommendation of
termination" and that these "procedural protections are fully consistent with
OPM regulations." Id. at 6. The Union stresses that under the provision
this input is to be made at the level of the Activity. The Activity has the
authority only to make recommendations to the Agency, which makes the actual
decision to terminate probationary employees. The Union argues that the
measures encompassed by Provision 1 would place no constraints on the Agency's
ability to make the decision to terminate a probationary employee and would not
subject that decision to arbitral review.

The Union argues that Provision 1 does not interfere with management's
right to hire. The Union contends that, under Authority case law,(3) that right is violated "only when
the decision to terminate is subject to arbitral review or mandatory
prerequisites to termination, such as enhanced notice or opportunity periods."
Id. at 14.

B. Analysis and Conclusions

In INS, the United States Court of Appeals for the District of
Columbia Circuit found that, in the Civil Service Reform Act of 1978, Congress
expressly preserved an agency's discretion to remove summarily a probationary
employee, retaining for the probationary employee only minimal due process.
INS, 709 F.2d at 729; seeBremerton Metal Trades Council and
Naval Supply Center Puget Sound, 32 FLRA 643, 661 (1988). The Authority has
also reiterated that "'in enacting the Statute, Congress did not intend that
procedural protections for probationary employees be established through
collective bargaining under the Statute.'" American Federation of Government
Employees, AFL-CIO, Local 1625 and Department of the Navy, Naval Air Station,
Oceana, Virginia, 30 FLRA 1105, 1127 (1988) (quoting Department of
Health and Human Services, Social Security Administration and American
Federation of Government Employees, Local 1923, AFL-CIO, 15 FLRA 714, 715
(1984) (HHS, SSA)). Rather, "Congress instructed OPM, not FLRA, to
implement the probationary program and to provide whatever procedural
protections were necessary for probationary employees." HHS, SSA, 15
FLRA at 715 (quoting INS, 709 F.2d at 729).

In our view, Provision 1 affords probationary employees procedural
protections beyond those provided by OPM. The OPM regulations at 5 C.F.R.
º 315.804 provide only that a probationary employee who is being
terminated for unsatisfactory performance or conduct be notified in writing as
to why he or she is being terminated and the effective date of the action.
Under the procedures provided by OPM the employee is specifically not given a
right of reply. Federal Personnel Manual (FPM) Chapter 315, subchapter
8-4.a.(3). In the FPM, OPM further provides that:

Although it is not required, it is good personnel practice to furnish
every separated probationer with enough factual information (as distinguished
from conclusions) about his/her performance or conduct to make the agency's
basis for the action clear. One way to accomplish this is to have an
appropriate supervisory or personnel official discuss the basis for the
agency's action with the employee.

FPM Chapter 315, subchapter 8-4.a.(4).

Provision 1 requires that a probationary employee be provided notice at
the recommendation stage that his or her termination is being contemplated and
to be given the reasons for that action. At the employee's request, copies of,
or access to, documents or files relied on that evidence the deficiencies in
the employee's conduct or performance must be provided to the employee. Under
the provision, the employee may request a meeting at which the employee is
afforded union representation and the opportunity to present any evidence,
explanation or defense to the "potential" removal. If, after the employee's
presentation, the Agency determines to go forward with a recommendation to
remove, all materials provided by the employee are to be forwarded with the
recommendation.

We find, as the Union acknowledges, that these measures constitute
procedural protections. We disagree with the Union, however, that they do not
extend beyond those provided by OPM. The provision's requirement that notice of
a potential termination be given a probationary employee at the recommendation
stage and that the employee be given an opportunity to present an "explanation"
or "defense" go beyond the procedures provided by OPM as does the requirement
that material provided by the employee accompany any subsequent recommendation
that the employee be terminated. The OPM-established procedures make no
provision for an employee to proffer a defense or explanation during the
process by which the decision to terminate him/her is made. In this regard, FPM
Chapter 315, subchapter 8-4.a.(4), which is quoted above, is limited to
authorizing an agency to furnish enough factual information to an employee to
make the basis of the agency's action clear but does not extend to providing
the employee with an opportunity to offer a reply or defense. And, pursuant to
subchapter 8-4.a.(3) of FPM Chapter 315, "[t]he employee is not given a right
of reply."

Because Provision 1 would establish procedural protections beyond those
provided by OPM, it is inconsistent with Federal law and Government-wide
regulation. Consequently, it is nonnegotiable under section 7117(a)(1) of the
Statute. In view of this conclusion, it is unnecessary to address the parties'
arguments concerning the applicability of management's right to hire to this
provision.

IV. Provision 2

ARTICLE 48 (Travel), Section 1 E:

E. If an employee does not incur lodging costs (e.g., stays overnight
with relatives or friends rather than at a hotel), the per diem will be as
cited in subsections B. and C. above plus $25.00.

A. Positions of the Parties

The Agency characterizes this proposal as concerning a "salary
supplement" or a "monetary fringe benefit." Agency Statement of Position at
10-11. Based on that characterization, it asserts that Provision 2 does not
concern a negotiable condition of employment. In support of this assertion, the
Agency contends that wages and other matters pertaining to compensation of
federal employees are outside the duty to bargain. Secondly, the Agency asserts
that Provision 2 violates the merit system principle of equal pay for work of
equal value, which is set forth at 5 U.S.C. º 2301(b)(3). Based on these
reasons, the Agency contends that Provision 2 is not negotiable.

The Union contends that the Agency has mischaracterized Provision 2 and
that it does not, in fact, concern pay or benefits. The Union describes this
provision as establishing a per diem rate and contends that because the Agency
is not subject to the Federal Travel Regulations, Agency-promulgated travel
regulations are negotiable, absent a showing of compelling need. The Union also
disputes the Agency's contention that pay and fringe benefits are, perse, outside the duty to bargain. Lastly, the Union urges that the
Agency's assertion that Provision 2 violates the merit system principle set
forth at 5 U.S.C. º 2301(b)(3) is a "make weight argument" and should be
dismissed. Union reply brief at 17.

B. Analysis and Conclusions

The Agency's assertion that pay and money-related fringe benefits,
perse, are not conditions of employment is not a viable one in
view of the Supreme Court's decision in Fort Stewart Schools v. FLRA,
110 S. Ct. 2043 (1990) (Fort Stewart). In Fort Stewart, the Court
rejected an argument to the effect that wages and fringe benefits could not be
deemed "conditions of employment" and upheld, as based on a permissible
construction of the Statute, the Authority's conclusion that some proposals
relating to a salary increase and fringe benefits concerned conditions of
employment within the meaning of the Statute. Based on Fort Stewart, we
reject the Agency's argument here.

We also reject the Agency's argument that Provision 2 is not negotiable
because it is inconsistent with a merit system principle set forth in 5 U.S.C.
º 2301(b). The Authority has held, on the basis of the legislative history
of the Civil Service Reform Act of 1978,(4) that a merit system principle, alone, is not a basis on which
the Authority will find a proposal nonnegotiable as conflicting with law. In
order for a proposal that implicates a merit system principle to be found
nonnegotiable, it must be established that the proposal conflicts with a law,
rule or regulation implementing or directly concerning the merit system
principle. For example, Department of the Air Force, Carswell Air
Force Base, Texas and American Federation of Government Employees, AFL-CIO,
Local 1364, 35 FLRA 754, 761-62 (1990); National Treasury Employees
Union and Internal Revenue Service, 21 FLRA 730 (1986).

In view of our rejection of the Agency's arguments that: (1) pay and
fringe benefits, perse, are not negotiable conditions of
employment, and (2) merit system principles standing alone provide a basis for
finding that a proposal conflicts with law, it is unnecessary to address the
merits of the Agency's characterization of Provision 2 as concerning pay and
fringe benefits.

Insofar as this provision concerns per diem for Agency employees
traveling on official business we note that, as a Government controlled
corporation, the Agency is not subject to the statutory and Government-wide
regulatory provisions that govern travel on official business for the
Government. 5 U.S.C. º 5701. Rather, Agency policies regarding such travel
are established by internal Agency regulations. SeeAmerican
Federation of Government Employees, AFL-CIO, Local 3804 and Federal Deposit
Insurance Corporation, Madison Region, 21 FLRA 870 (1986) (Proposals 7 and
11). Under section 7117 of the Statute, matters that are covered by agency
regulations are subject to bargaining unless the regulations are supported by a
compelling need. See, for example, id. at 890. Here there
is no claim that Provision 2 is inconsistent with an Agency regulation for
which a compelling need exists.

Based on the foregoing, we conclude that Provision 2 is within the duty
to bargain.

V. Order

The Union's petition for review as to Provision 1 is dismissed. The
Agency shall rescind its disapproval of Provision 2.(5)

FOOTNOTES: (If blank, the decision does not
have footnotes.)

1. The Agency had filed exceptions to
the interest arbitration award which were dismissed by the Authority in
Federal Deposit Insurance Corporation, Chicago Region, Chicago, Illinois and
National Treasury Employees Union, 38 FLRA 943 (1990).

4. 4 The Joint Explanatory
Statement of the Committee on Conference for the Civil Service Reform Act
stated:

Unless a law, rule or regulation implementing or directly concerning
the principles is violated (as under section 2302(b)(11)), the principles
themselves may not be made the basis of a legal action by an employee or
agency.

S. Rep. No. 95-1272, 95th Cong., 2d Sess. 128 (1978).

5. 5 In finding that
Provision 2 is within the duty to bargain, we make no judgment as to its
merits.